Eli Dourado

Steal this necklace design: why there should be no IP in fashion

There are various laws and norms that protect intellectual property. Urban Outfitters seemed to have violated one of those norms last week when it was revealed that some of its jewelry is very similar to that of an independent designer’s on Etsy. It turns out that it’s a very common, completely unoriginal design, much ado about nothing.

A discussion of the Urban Outfitters debacle on Twitter (in which I alleged IP norm-enforcing hypocrisy) got me thinking about the optimal level of IP protection in the fashion industry. I’m pretty well convinced it’s zero, for two reasons.

First, the optimal level of IP protection varies inversely with how useful it is to create small variations off other people’s innovations. In a field in which every innovation is something truly new, you want more extensive IP protection. But in fashion, most innovations are similar to past innovations. To enforce IP in such an industry would be to create what Michael Heller calls The Tragedy of the Anticommons.

The tragedy of the anticommons is analogous to the tragedy of the commons. The latter occurs when too many owners have the right to use some property, leading to overuse. The former occurs when too many owners hold rights of exclusion, leading to underuse.

“Too many owners” may be even one owner. If every fashion design now in existence were assigned to a single owner with the right to exclude use of the design, it would be a nightmare for anyone trying to create new designs. Every new design is similar to an old one, which entails costly negotiations and royalties to be paid to the originators. It’s better just to let everyone rip everyone else off.

The second reason to oppose IP protection in fashion is that it is an industry that is almost entirely about signaling. Inframarginally, signaling generates information and serves a useful social function, but at the margin, it’s better if fewer resources go into signaling. For instance, if you impose a tax on the signal that causes everyone to signal half as much, information is preserved and the status of every individual remains the same, but fewer resources are consumed.

We can prevent resources from flowing into the fashion industry at the margin by ensuring that innovators are not rewarded. If necklace designers on Etsy die in poverty and obscurity that is partially a good thing, because it encourages other people not to become necklace designers. But if instead they were getting payments from Urban Outfitters for their designs, this would draw valuable human capital into the fashion industry and away from some other more socially useful field.

The astute reader will notice that there is a reading of my second argument that refutes my first one. If innovation in fashion (at the margin) is bad, then what better way to prevent it than by making the whole industry a giant anticommons through very strong IP protection? Points for cleverness, astute reader, and maybe someday the government will make it happen, but in the meantime we should stick to considering small changes to the status quo.

There are very few legal protections of intellectual property in the fashion industry, but consumers' norms about “stealing” from independent artists and the threat of boycott got Urban Outfitters’s attention. These norms strike me as poorly thought out. What is unseen is that they make us poorer. They cause companies to spend resources on legal departments and PR teams, and everyone else to spend more of them on signaling than we otherwise would. We’ll be richer when we lighten up.